ROYAL BANK OF SCOTLAND is working on a radical plan to salvage its troubled
Irish business by merging it with a number of rivals.

Attempts to stem the losses at Ulster Bank or find a buyer have drawn a blank.
A team inside RBS is looking at tie-ups between Ulster and other lenders,
such as Permanent TSB or the Irish subsidiaries of Danske Bank or KBC.

Bolting the institutions together could allow the new Ulster Bank to strip out
costs and mount a credible challenge to Ireland’s top players.

Ulster Bank is RBS’s biggest problem, with £2.5bn of losses in the past two
years. It accounts for less than 4% of the RBS balance sheet yet last year
was responsible for 20% of bad debt charges.

RBS is in talks with a handful of private equity firms about providing tens of
millions of pounds in backing for the venture. Deep-pocketed investors such